House Bill 1645 states, all persons working in the Contracting Industry Group shall be required to have "Workers' Compensation". The only exception; corporate officers of S or C type corporations (note….LLC's are not exempt) or a sole proprietor or partner shall not be required to carry Workers' Compensation on themselves if they are doing work directly for the owner of the property, but shall be required to carry Workers' Compensation on any sub-contractor and their employees if not otherwise covered by a policy of their own.

The current laws exempt business owners in all industry groups from purchasing Workers' Compensation on themselves. Effective 12/31/2009, only business owners in the Contracting Industry Group will be required to purchase Workers' Compensation insurance on themselves.

Representative Mumpower sponsored the bill in the House and Senator Ketron sponsored the bill in the Senate. May of 2008, the House voted 67 to 23 and the Senate voted 23 to 5  in favor of the bill.

Premiums will be calculated by a price index; typical for the construction industry is $10.00 to $40.00/100 of payroll. To insure compliance the State of Tennessee intends to use your Federal Income Tax return to verify income.

When law makers propose a bill, where there is an economic impact, they will include a Fiscal Note which estimates revenue collections to the State. As you can see, the Fiscal Note indicates small business owners will pay an average insurance premium of $500.00/year.

Unfortunately,  Mr. James W. White , Executive Director of the Fiscal Review Committee, and the Tennessee Legislature relied on technical data that referenced a national average for all persons, in all industries, covered by Workers' Compensation, not the self employed business owners, in the construction industry that are targeted by this bill.

In a Joint Committee hearing on Workers' Compensation, a spokes person for the Workers' Compensation Advisory Council provided the following commentary: click to see video. The WCAC defined the problem as follows: contractors and sub-contractors that declare their employees as independent subs, resulting in workers that are not covered by insurance.

The Legislature's decision has resulted in requiring responsible business owners, only in the construction industry, to purchase an insurance product that's not only redundant but vastly inferior to its private sector counterpart. This decision does not support the principles of personal responsibility and accountability.

It is critical that we respectfully communicate to our Elected Officials the burden that is being placed on business owners in the construction industry.

                rep.stacey.campfield@capitol.tn.gov
                rep.mike.bell@capitol.tn.gov
                rep.brian.kelsey@capitol.tn.gov
                rep.sherry.jones@capitol.tn.gov
                rep.gary.moore@capitol.tn.gov

                      ________________________________________________________________________________

I am a small business owner in the construction industry. In 2008, House Bill 1645, now Public Chapter 1041, was passed into law requiring, effective 12/31/2009, all business owners in the construction industry to purchase Workers' Compensation insurance on themselves and their administrative staff.

According to the Fiscal Note, "approximately 10,000 additional persons will obtain coverage at an average rate of $500 per year". Unfortunately, the Legislature relied on technical data that referenced a national average for all persons, in all industries, covered by workers comp, not the self employed business owners, in the construction industry that are targeted by this bill.

Workers' Compensation rates can range from $10.00 to $40.00/100 of payroll.  A $50k/year income would be a rate of $5,000 to $20,000/year, not the $500.00/year as referenced in the Fiscal Note.

Please be advised, that I cannot pass-on nor can I absorb the additional costs of the newly mandated Workers' Compensation regulation. Therefore, I respectfully request the following:

        1. The Tennessee General Assembly rescinds Public Chapter 1041.

        2. I respectfully request the Tennessee General Assembly to write laws that respect the                               rights of the individual and that up-hold the principle of personal responsibility.

        3. I respectfully request the Tennessee General Assembly to write laws that require the courts to              not enrich the irresponsible by unjustly punishing those that obey the law.